Tri-City to launch Carlsbad wellness center

At a special meeting Tuesday, the hospital's board of directors
voted 6-1 to sign a 25-year lease with private developers ECR
limited partners at a rate ranging from no less than $3.5 million
and no greater than $4.2 million per year.

Tri-City will invest nearly $10 million to get the project up
and running, while ECR will reportedly sink $32 million into
construction of the two buildings that will house the
88,000-square-foot complex to be built on a vacant 5.7-acre parcel
on El Camino Real just south of Palomar Airport Road.

Board members said little about their reasons for voting to
create the wellness center, which they said they have discussed in
closed session under the auspices of trade secrets for four
years.

Board member Kathleen Sterling, the lone no vote on the wellness
center, said she believed the district should not focus its scarce
resources in south Carlsbad. Project proposal papers presented to
the board Tuesday night by hospital administrators state that the
wellness center would include medical office space that would be
leased to up to 20 primary care physicians.

Sterling noted that there are plenty of primary care doctors
much closer to the hospital's main campus at Vista Way and Thunder
Drive in Oceanside.

"I think we should put our money really focused on working with
the primary care physicians that are here," Sterling said.

Though she did not speak before her vote, board member Darlene
Garrahy said afterward that she believes in the project because
there are few if any primary care doctors offices in that
particular area of south Carlsbad, and because she has visited
other wellness centers that are successful. She noted that the
hospital expects the wellness center to attract wealthy customers
who will bring much needed additional revenue to a hospital that is
currently operating $2.2 million in the red.

"You either increase your revenue to pick up the losses from
other programs that are losing money, or you go out of business,"
Garrahy said.

The complex is expected to be complete in September 2008.
Membership fees are estimated to be $75 per month per person.

While that amount may seem high, hospital Vice President Allen
Coleman said that the facility will offer much more than a
traditional health club, with cardiac rehabilitation and other
programs targeting patients who need more than a personal trainer
and a treadmill.

"We do not feel like we are competing with any other fitness
clubs in the area," Coleman said.

Over the initial 25-year life of Tri-City's lease, it projects
it will make a profit of about $70 million. The board and hospital
administrators have said they hope that by putting a Tri-City
facility in Carlsbad, they will be able to increase the number of
people who go north to Oceanside for more serious medical
treatment, rather than traveling to other hospitals such as Scripps
Encinitas.

More than $50 million of the $70 million in projected revenue
increases estimated by administrators would come from an increase
in Tri-City's market share. That market share, according to
hospital officials, currently stands at 21 percent. They say they
hope building the wellness center will generate enough referrals to
push that market share to 30 percent.

Dr. John Young, the only member of the public to speak Tuesday,
said he thought the notion of generating additional business for
Tri-City was wishful thinking. He noted that state and federal law
forbid Tri-City from requiring the doctors who occupy the medical
offices at the wellness center to refer patients to Tri-City.

"I don't think this makes any sense at all," Young said.

Tuesday's vote also approved a management agreement with Power
Wellness Management, a Chicago-based fitness club management firm
that runs wellness centers throughout the nation. Power Wellness
will receive $150,000 from the district to cover costs incurred
before the wellness center opens and will receive 3 percent of
membership fees.